Plan for Sugar: Subsidize, Tax, Regulate. Sounds Familiar

[UPDATE (Wednesday): Drats. Sugar policy takes down another intellectual victim. Of course, the “subsidies” for sugar come mostly in the form of import quotas, which serve to prop up prices for sugar by limiting supply. We knew this, but still managed to get it wrong in the post below. In any case, the idea of taxing sugar-containing drinks to fund health care programs is still wacky. ]

Senate leaders are considering new federal taxes on soda and other sugary drinks to help pay for an overhaul of the nation’s health-care system.

The taxes would pay for only a fraction of the cost to expand health-insurance coverage to all Americans and would face strong opposition from the beverage industry. They also could spark a backlash from consumers who would have to pay several cents more for a soft drink.

According to the CBO, a tax of three cents per 12-ounce serving would generate $24 billion over the next four years. Of course, the nanny staters and “consumer activists” out there love the idea of punishing the consumption of products they consider unhealthy — the modern equivalent of sinful.

Rob at the North Dakota blog, Sayanything, points out the weirdness of subsidizing sugar — supported through import quotas and other programs to the tune of $2 billion of year — which makes it cheap, and then taxing it, which makes it expensive.

But such a program would emulate a well-established model of health care financing. Encourage and manage a product through quotas and subsidies, tax it, demonize it, tax it again, and then, establish complete government control over the product through FDA regulation. (See this week’s Senate HELP Committee hearing.) The model is, of course, tobacco.

The only thing missing from the sugar scheme is a multistate lawsuit by ambitious attorneys general and contingency attorneys to shake down the industry for billions more in money, a guaranteed source of income that would throw off cash for political purposes, too.